Advice for first time storage investor

[Chris C.]

What advice would you give to a first time investor on how to find, what to look for, how to analyze, acquire financing, negotiate, and buy one of these properties in these market conditions?

[Henry Clark]

1.  Don’t buy. To high premiums.

2.  You’re in Texas, no zoning in the counties.

3.  Pick a county or area within 40 miles of you.  Something close enough for you to check in.

4.  Want you to look at county or city property tax sales.  Don’t go to auctions. Look for their off list properties.  If they want $25,000; offer them $5,000.   Send them a letter.  Do your due diligence on the property

5.  Look for 2 acres or more.  On or near road or crossroads.

 
6.    Look for property with electric high lines over a portion preferably. You can’t build under power lines.  Makes property cheaper.  You will “build” under them.

7.  You’re going to do two products.  20 foot cargo containers and surface parking.  Don’t do buildings unless you’re in a market where 10x20 are $130 or more.  Can make a profit at $90 but not good enough for risk reward.

8.  Read my post on setting up cargo containers and parking.

9.  Depending on market your will rent parking for $50 for a 30 foot space and $70 for a 40 foot space.  Put these on the other side from the containers.  As you rent the containers you will start getting rid of the parking.  

10.  You will buy Used containers around $2,300.  One trip around $2,900. Your catching and unusual moment in time.  These were twice this 2 years ago.  Buy these in quantities of 10 as you need them.

 11.  Rent them for $80 and $130 each.  They are 8x 20.  Similar to a 10 x 15.

12.  Spend $3,000 for a website.  Join sparefoot during your rent up phase.  Put a road sign up for $20,000.  Take the calls yourself.  If you need a different phone get an easy number.

13.  Lane prep, fence, security system, rock roads, etc.

14.  Texas has high property taxes.   No taxes on cargo containers

15.  Insure as Personal property. Use Ponderosa insurance.  Part of Uhaul.  All they do is self storage.

16. Use Webselfstorage management software. There are better software out there but this is the one you should start with.

17.  If you plan to keep do year one writeoff.  Containers, fences, roads, pads, security system, electrical, etc.  Don’t do if you plan to sell.  

18.  Run the numbers.  Validate all information

19.  Don’t trust anything I tell you.  Validate.

20.  If you do a 3 acre site, in 2 years you should have at least $1mm appraised equity.  
Think scaling.  Lot of opportunity in Texas.  In 5 years you want to have 10 of these locations.

Read my posts and vote for them if useful.   

Don’t contact me.

Start small and Make Your Big Mistakes Early.